[7/1 Morning Paper/20 Time-Saving News Picks] Nike Q4 Revenue Beats but Relies on Tariff Refunds, AMD +7% to All-Time High, SK/Samsung Invest Over $500B in Memory in Korea, US ADP Employment & ISM Manufacturing Today

Distribution: Yamashan@Investment

You want to keep up with global news, but you don't have the time.

In this magazine, we curate 20 essential stories, primarily from major English-language media, condensed into a 5-minute read. Useful for both business and investment.

Today's Highlights:

Last night, Tuesday, June 30, US stocks saw mixed results following the previous day's record highs: the Dow fell 0.24%, the S&P 500 rose 0.03%, the Nasdaq gained 0.29%, and the Russell 2000 remained flat. After the close, Nike announced its fiscal Q4 2026 (April-June) earnings, with revenue of $10.97 billion (approx. 1.76 trillion yen), beating the market expectation of $10.86 billion. EPS was $0.72 (market expectation $0.13), but this included a $0.52 special effect from a $986 million (approx. 158 billion yen) IEEPA tariff refund, making the adjusted EPS $0.20. China sales were down 12% year-over-year, CFO Matt Friend is stepping down on August 17 (to be replaced by former Pfizer executive David Denton), and with tariffs expected to rise from 10% to 15% in August, the company remains in a structural transition period. AMD rose 7% to an all-time high of $577.61 (Wells Fargo raised its price target from $505 to $615), the Nasdaq 100 ETF rose over 1%, and the Philadelphia Semiconductor Index gained over 3%, showing strength in the semiconductor sector. SK Hynix and Samsung announced plans for over $500 billion (approx. 80 trillion yen) in memory capacity investment in South Korea, and Micron also reacted with a 1% gain. AeroVironment surged over 30% (exploding demand for military drones, with the Ukraine-Iran war proving that "the nature of war has changed"), while Concentrix fell 22% (missing Q2 performance targets). US-Iran envoy Steve Witkoff is heading to Doha, and President Trump is scheduled to meet with Iran in Qatar on Tuesday. WTI crude oil stabilized at $70.09, and the US 10-year Treasury yield was 4.38%. Today, Wednesday, July 1, the US ADP June employment change, US June ISM Manufacturing PMI (expected 53.7), the Bank of Japan Tankan Q2 report, and remarks by Fed Governor Warsh at a European forum are scheduled.

Today's Topic List

Nike Earnings
① [Earnings] Nike Q4 Revenue Beats at $10.97B—Boosted by $986M Tariff Refund, Adjusted EPS $0.20
② [Earnings] Nike China Sales -12%, CFO Change, August Tariff Hike to 15%—Struggles of a Transition Period Continue

AI & Tech Mega News
③ [Semiconductors] AMD +7% to All-Time High of $577.61—Wells Fargo Raises Target to $615
④ [Semiconductors] SK & Samsung Invest Over $500B in Memory in Korea—Micron Reacts +1%
⑤ [Corporate/Defense] AeroVironment +30%—Exploding Demand for Military Drones
⑥ [Market] CME Group to Launch Single-Stock Futures on 7/27—Targeting Nvidia and SpaceX

Economic Indicators & Monetary Policy
⑦ [Economic Indicator] Today 7/1: US June ISM Manufacturing PMI—Expected 53.7, Caution on Price Index Remaining Above 80
⑧ [Economic Indicator] Today 7/1: US June ADP Employment Change—Leading Indicator for Official Jobs Report
⑨ [Economic Indicator] US June Consumer Confidence 93.1 (Below Expected 94.8)—Mixed with Chicago PMI at 62.7
⑩ [Economic Indicator] May JOLTS Job Openings 7.618M (Exceeding Expected 7.298M)—Labor Market Remains Tight

Iran & Geopolitics
⑪ [Iran] US and Iran to Resume Talks in Doha on Tuesday—Envoy Witkoff En Route
⑫ [Commodities] WTI Crude Oil Stable at $70.09—Supply and Demand Easing as Iran Situation Calms

US Stock Trends
⑬ [US Stocks] US Stocks Mixed on Tuesday 6/30—Dow -0.24%, Reaction Following Record Highs
⑭ [Corporate] Verizon -5.2% After Dow Exit—Dividend Over 7% Remains Attractive
⑮ [Earnings] Concentrix -22% on Q2 Miss—Structural Changes in AI Service Outsourcing

Monetary Policy & Regulation
⑯ [Monetary Policy] Fed Governor Warsh to Speak at European Forum (Today 7/1)—Will Hawkish Stance Continue?
⑰ [Regulation] US House Committee Launches Investigation into Merck and AbbVie—Clinical Trials Linked to Chinese Military

Japan (Politics, Economy, Corporate)
⑱ [Japanese Economy] Today 7/1: BOJ Tankan Q2—Business Sentiment, Material for Additional Rate Hike Decisions
⑲ [Japanese Market] Nikkei Average Searches for Direction Amid Mixed US Stocks—Focus on AI Semiconductor Trends
⑳ [Forex] Dollar-Yen at 162, Swayed by BOJ Tankan—Scenario for Yen Appreciation Continues

① [Earnings] Nike Q4 Revenue Beats at $10.97B—Boosted by $986M Tariff Refund, Adjusted EPS $0.20

After the close last night, Tuesday, June 30, US sports equipment giant Nike announced its fiscal Q4 2026 (April-June) earnings. Revenue was $10.972 billion (approx. 1.76 trillion yen, beating the market expectation of $10.859 billion) and EPS was $0.72 (significantly beating the market expectation of $0.13), which on the surface are figures far exceeding expectations. However, there is a major catch behind this significant beat.

Of the $0.72 EPS, $0.52 is a temporary effect from a $986 million (approx. 158 billion yen) "expected IEEPA tariff refund." Excluding this, the adjusted EPS is $0.20, which, while above the market expectation of $0.13, is not as strong as the surface figures suggest. Gross margin rose 8.9% year-over-year, but this was also primarily due to the special factor of the tariff refund.

The stock price fluctuated in after-hours trading, and market sentiment is divided. The key to watch is whether the turnaround by new CEO Elliott Hill, who has adopted a "Win Now" strategy, is truly progressing.

★ Investor Perspective: It is premature to take Nike's numbers at face value. In my view, excluding the temporary tailwind of the tariff refund, the recovery of the core business is still in the "in-progress" stage. The adjusted EPS of $0.20 is down compared to the same period last year. On the other hand, since the stock price started from a level where risks of falling below $40 were being pointed out, it is understandable that the after-hours reaction is divided. As a long-term investor, it is reasonable not to rush to a judgment here and wait for the full-year guidance to be disclosed at the Investor Day in November. For Japan's Asics (7936) and Mizuno (8022), Nike's 12% decline in the Chinese market continues to represent an opportunity to gain market share.

(Source: The Street, CNBC, 24/7 Wall Street)

② [Earnings] Nike China Sales -12%, CFO Change, August Tariff Hike to 15%—Struggles of a Transition Period Continue

When digging into the details of Nike's earnings, the number of challenges stands out. Revenue in China was $1.30 billion (approx. 208 billion yen), down 12% year-over-year, although it did beat the market expectation of $1.24 billion. For the full fiscal year 2026, net income was $3.11 billion and EPS was $2.10 (down from $3.22 billion and $2.16 the previous year), indicating a clear downward trend on an annual basis.

There is also significant management turnover, with CFO Matt Friend stepping down on August 17 after 18 years of service, to be succeeded by former Pfizer executive David Denton. Furthermore, tariff rates are expected to increase from the current 10% to 15% starting in August, creating a structure where cost pressures will intensify further.

CEO Elliott Hill stated candidly during the post-earnings analyst call, 'For Nike Sportswear and Jordan Streetwear, sell-through remains a challenge, which is impacting current discounting and future orders,' adding, 'The results are not yet good enough.' He also clearly stated, 'We are fully committed to winning in the Chinese market.'

★ Investor Perspective: CFO change, 15% tariff hike, 12% decline in China revenue, and the structural weakness of Sportswear and Jordan—with this many factors piling up, the road to a turnaround is steep. While Hill's admission that 'results are not yet good enough' can be appreciated as an honest stance, it is also a source of anxiety for the market. The Investor Day on November 16-17 is when the full-year guidance will be disclosed, and I want to gauge the situation until then. For long-term holders, the decision to pick up shares when they fall below $40 or wait until signs of recovery appear is a matter of personal judgment. In my view, the launch of the exclusive line for Caitlin Clark (women's basketball player) and sales during the 2026 holiday season will be the next clues.

(Source: CNBC, The Street)

③ [Semiconductors] AMD +7% to All-Time High of $577.61—Wells Fargo Raises Target to $615

Yesterday, Tuesday, June 30, AMD rose over 7% during trading hours, hitting an all-time high of $577.61. The intraday high was $579.73. Wells Fargo raised its price target from $505 to $615, an increase of approximately 21%, and maintained its 'Overweight' (bullish) rating.

The Nasdaq 100 ETF (QQQ) was also up over 1%, and the Philadelphia Semiconductor Index surged over 3%, with the entire semiconductor sector showing strength. Micron was also up 1%, and Nvidia maintained an upward trend.

The factors behind AMD's rise are multifaceted. It is supported by expectations for full-scale mass production of the 'MI400' series AI accelerators, market share expansion in the data center GPU market, stable share maintenance for Ryzen and EPYC, and observations of large-scale procurement by hyperscalers (major cloud providers) such as Microsoft, Meta, and Google.

★ Investor Perspective: AMD's update to an all-time high can be read as a signal that the structure previously dominated by Nvidia is changing. With an increasing number of cases where AMD's MI300 and MI400 series are being adopted in the AI accelerator market, Nvidia's monopolistic position is beginning to crumble little by little. Microsoft, Meta, Google, and Oracle have strong motives to proceed with AMD procurement from the perspective of vendor diversification. In my view, AMD is trading at about 'half' the market capitalization of Nvidia, making it an attractive level from a risk-reward perspective. This trend is also expected to be a tailwind for Japan's Socionext (6526) and Renesas Electronics (6723).

(Source: TradingKey, The Street)

④ [Semiconductors] SK & Samsung Invest Over $500B in Memory in South Korea—Micron Reacts +1%

Yesterday, Tuesday, June 30, SK Hynix and Samsung announced a memory capacity investment plan of over $500 billion (approx. 80 trillion yen) within South Korea. The report spread via Barron's and has had a major impact on the entire memory sector. Micron rebounded from early Monday losses to close up 1%.

Specific details include: expansion of mass production capacity for HBM3E and HBM4, support for next-generation 3D NAND, investment in advanced DRAM processes (adopting EUV), and expansion of R&D for AI-specific custom memory (such as CXL memory). The total investment of over $500 billion is the largest memory industry investment plan in history.

This is a major trend running parallel to Micron's announcement of 'double-speed' HBM4 mass production and its $22 billion strategic contract, indicating that the entire memory industry is entering a capacity expansion race to meet AI demand.

★ Investor Perspective: The over $500 billion investment by SK Hynix and Samsung is evidence that the 'super cycle' in the memory industry is real. On the other hand, the intensification of the capacity expansion race also contains the risk of future price declines. In my view, since the situation where demand for HBM4 and HBM4E exceeds supply is likely to continue for the time being, it is highly probable that the strong performance of major memory companies will continue until early 2027. For Japanese companies like Kioxia (285A, up over 1,000% in the past 12 months), Advantest (6857, over 60% of the global HBM tester market), Tokyo Electron (8035), SUMCO (3436), Shin-Etsu Chemical (4063), Lasertec (6920), and Ibiden (4062), the continuation of capital expenditure demand is a clear tailwind.

(Source: Schwab, Barron's, The Street)

⑤ [Corporate/Defense] AeroVironment Up Over 30%—Explosive Demand for Military Drones

AeroVironment (AVAV) surged over 30% before the market opened yesterday, Tuesday, June 30. The catalyst was the earnings report released after the close on Monday, June 29, which was a blockbuster (significantly strong performance).

CEO Wahid Nawabi stated in an interview with CNBC that 'conflicts in Ukraine and Iran have fundamentally changed warfare.' The content was that demand for the company's flagship products, such as Switchblade loitering munitions, JUMP 20, and Puma small unmanned aerial vehicles, is expanding explosively.

AeroVironment is a major supplier of military drones to the US military, and its structure is directly bolstered by geopolitical tensions such as the drone war in Ukraine, the ongoing situation in Iran, and preparations for a Taiwan contingency. Small drones capable of low-cost, mass production are becoming positioned as one of the primary weapons of modern warfare.

★ Investor Perspective: AeroVironment's rise of over 30% can be read as a moment where a "niche-strong stock" within the defense sector was suddenly re-evaluated. It has a growth axis different from traditional defense giants like Lockheed Martin and Northrop Grumman, and can also be expected to provide portfolio diversification effects. In my view, low-cost, mass-produced drones are a field that symbolizes the "democratization of war," a growth area where the market size will expand significantly over the next 10 years. In Japan, this trend will also affect major defense-related companies such as Mitsubishi Heavy Industries (7011), Kawasaki Heavy Industries (7012), IHI (7013), and SUBARU (7270, helicopter business), as well as companies with unexpected connections like Yamaha Motor (7272, unmanned helicopters) and Fujifilm (4901, image analysis).

(Source: Schwab, CNBC, The Street)

⑥ [Market] CME Group to launch single stock futures on 7/27—targeting Nvidia and SpaceX

Yesterday, Tuesday 6/30, CME Group announced the start of trading for Single Stock Futures on 7/27. The initial target includes over 50 stocks, including those that make up the S&P 500, Nasdaq 100, and Russell 1000 indices. Specifically, major stocks such as Nvidia, SpaceX, Micron, and Apple are in the initial lineup.

Single stock futures are futures contracts for specific individual stocks, used for hedging against stock price fluctuations or for speculative trading. In the US, they were once operated by OneChicago, but it closed in 2020. This launch by CME signifies the revitalization of derivative product trading in the US market and an expansion of trading options for institutional investors and individual traders.

SpaceX has seen intense volatility since its IPO on 6/12, moving from $135 to $225.64 and back to the $160 range, so single stock futures are likely to become a product that meets the hedging demand for this stock. AI-related stocks like Nvidia and Micron are also expected to have needs for futures trading as highly volatile stocks.

★ Investor Perspective: CME Group's launch of single stock futures is an important move to increase risk management options for individual investors. In my view, the highlight will be how widely this is adopted in the US market, where options trading is already active. In particular, single stock futures for emerging large-cap stocks like SpaceX, when viewed in combination with their inclusion in the Nasdaq 100 (effective 7/7), can be read as a move to prepare risk hedging tools for institutional investors. In the Japanese market, TOPIX futures and Nikkei 225 futures are mainstream, and single stock futures are not widespread, but depending on the success in the US, there is a possibility that consideration will progress in the domestic market as well. While there is little direct impact on long-term investors, the improvement in overall market liquidity is a welcome move.

(Source: Trading Key)

⑦ [Economic Indicators] Today 7/1 US June ISM Manufacturing PMI—53.7 expected, caution over price index remaining above 80

The US June ISM Manufacturing PMI, to be announced today, Wednesday 7/1, is expected to be 53.7 (down from 54.0 in May). Since a reading above 50 indicates expansion in the manufacturing sector, it is expected to remain in the expansion zone. Market interest is focused on the "Prices Paid Index" component.

Recent surveys have shown it consistently above 80, suggesting that inflationary pressure in the manufacturing sector remains strong. The employment index is also a point of interest, functioning as a leading indicator ahead of the US June employment report on 7/2. If the ISM employment index is weak, the expectation that "the next day's figures will also be weak" is likely to spread.

The temperature of the manufacturing sector is directly linked to the performance of large industrial stocks such as Caterpillar, John Deere, Emerson Electric, and Eaton. Last Friday, 6/26, Caterpillar fell -5.67%, a move dragged down by the US May durable goods orders, which were worse than expected at -4.5%.

★ Investor Perspective: An ISM price index above 80 is a warning sign from the Fed's perspective that "inflation is continuing on the manufacturing floor." It is difficult to judge based solely on the employment report figures, so the standard approach is to look at the ISM and employment report in combination. If inflation remains sticky even as the labor market loosens, the Fed will be unable to cut rates, which will continue to weigh on the valuation of US growth stocks. In Japan, this will also spill over into the earnings outlooks for Komatsu (6301), Hitachi Construction Machinery (6305), and Kubota (6326), so the movements of US manufacturing cannot be ignored.

(Source: Schwab, CMC Markets)

⑧ [Economic Indicators] Today 7/1 US June ADP Employment Change—Leading indicator for the actual employment report

The US June ADP employment change today, Wednesday 7/1, is attracting attention as a leading indicator for the US June employment report on Thursday 7/2. ADP employment is an indicator that captures employment trends in the private sector, and while it sometimes shows different movements from the employment report, which includes the government sector, it functions as material for gauging the direction of trends.

Looking at past patterns, while ADP and the employment report often move in the same direction (strong/weak), divergences also occur from month to month. The May ADP was below expectations, while the subsequent NFP employment report was a surprise +172K, a result in the opposite direction. We should keep the risk of divergence in mind this time as well.

Given the hawkish stance of Fed Chair Warsh, the US May PCE reaching a peak level of +4.10%, and the upward revision of US Q1 GDP to +2.1%, the simple framework is that if ADP is weak, "the Fed's wait-and-see stance will be solidified," and if it is strong, "the hawkish stance will be reinforced."

★ Investor Perspective: ADP is a pre-hint for the employment report, but overconfidence is forbidden. What I look at is the direction and the magnitude of the swing. If last month's divergence pattern repeats this month, it is safer not to make a judgment until seeing both the ADP and the employment report. Short-term traders may be tempted to try to capture the immediate reaction after the ADP announcement, but long-term investors can afford to wait calmly. By also looking at US Treasury yields and the dollar-yen movements, you can grasp the overall picture of the market's view on the Fed.

(Source: Schwab, Trading Economics)

⑨ [Economic Indicators] US June Consumer Confidence 93.1 (below forecast of 94.8) — Chicago PMI 62.7, mixed results

The US June Consumer Confidence (Conference Board version) released yesterday, Tuesday, June 30, was 93.1. While it fell below the market forecast of 94.8, it was an increase from May's 91.2. This movement is consistent with last Friday's 49.5 rise in the University of Michigan Consumer Sentiment Index (+10.5% from May), indicating that consumer sentiment in the US economy is gradually improving.

The Chicago PMI released at the same time was 62.7, significantly exceeding the market forecast of 55.4 and improving from the previous month's 56.7. Manufacturing business sentiment in the Midwest region is recovering rapidly. On the other hand, the Case-Shiller 20-City Home Price Index Y/Y was 0.8%, and the FHFA House Price Index Y/Y was 1.7% (down from 2.1% the previous month), indicating a moderate slowdown in the housing market.

Combining these three indicators, we see mixed signals: "consumer sentiment is on an improving trend but not as much as expected, manufacturing business sentiment is recovering rapidly, and the housing market is slowing down."

★ Investor Perspective: On days when multiple indicators are released simultaneously, it is important to look at them in combination. Reading the consistency between consumer confidence falling short of expectations but still trending upward, the Chicago PMI significantly exceeding expectations, and the housing price index slowing down, the reality is that the US economy is "strong but showing signs of slowing from its peak, with regional disparities." This structure continues the dilemma for Fed decisions, making a wait-and-see stance appropriate until the employment report on Thursday, July 2. As for the impact on the Japanese market, the Nikkei Stock Average is likely to continue searching for direction until the direction of the US economy becomes clear.

(Source: CNN, Trading Economics)

⑩ [Economic Indicators] May JOLTS Job Openings 7.618M (exceeding forecast of 7.298M) — Labor market remains tight

The May JOLTS job openings released yesterday, Tuesday, June 30, were 7.618M (significantly exceeding the market forecast of 7.298M). This was a slight increase from the previous month's 7.594M, indicating that the labor market remains tight. Colin Martin of Schwab commented, "April job openings were at a two-year high, and the ratio of job openings per unemployed person has exceeded 1 again."

The fact that JOLTS exceeded expectations is evidence that the firm trend in the employment market is continuing, and rather than being a factor that lowers the hurdle for Fed interest rate hike decisions, it is grounds for continuing the current wait-and-see stance. The number of job openings per unemployed person (JOLTS ÷ number of unemployed) exceeding 1 means that job demand is exceeding labor supply.

As a precursor to the US June employment report on Thursday, July 2, the strength of JOLTS supports the "continued tightening of the labor market" scenario. Even if the employment report falls below expectations (NFP 115K, unemployment rate 4.3%), it can be read that the structural strength of labor demand is being maintained.

★ Investor Perspective: The JOLTS figure of 7.618M exceeding expectations is a number with a wide range of interpretations for both the Fed and investors. If the tightness of the labor market continues, wage inflation pressure will also continue, creating a structure where Fed interest rate cut decisions are delayed. On the other hand, the fact that companies continue to post job openings is a positive factor indicating the resilience of the economy. By sector in US stocks, specific benefits can be considered, such as tailwinds for human resources services (Robert Half, ManpowerGroup) and continued demand for payroll services (ADP, Paychex). In Japan, this is also a movement to refer to for human resources-related companies (Recruit Holdings 6098, Persol Holdings 2181, En-Japan 4849).

(Source: CNN, Schwab, Trading Economics)

⑪ [Iran] US and Iran resume talks in Doha on Tuesday — Special Envoy Witkoff is heading there

According to CNN reports, President Trump's Middle East peace envoy, Steve Witkoff, headed to Doha, the capital of Qatar, yesterday, Tuesday, June 30. President Trump commented, "The US is scheduled to meet with Iran in Qatar on Tuesday," and peace talks between the US and Iran have resumed.

This is a move following the June 22 (Monday) Iran peace 60-day agreement (joint statement by Qatar and Pakistan, Bürgenstock, Switzerland talks) and the June 29 (Monday) "step back" agreement, and it is a structure where technical discussions in line with the 14-point memorandum are continuing. Both sides have ceased hostile acts and are maintaining the freedom of navigation for commercial vessels passing through the Strait of Hormuz.

Depending on the progress of the talks, it could lead to a full-scale easing of geopolitical tensions, such as the full-scale resumption of Iranian crude oil exports, the gradual easing of US economic sanctions on Iran, and the full-scale entry of IAEA inspectors into Iran.

★ Investor Perspective: Special Envoy Witkoff's visit to Doha can be read as a signal that peace talks have entered a stage of real progress. In my opinion, the Trump administration has a strong intention to solidify Middle East peace as an "achievement" with an eye on the 2027 presidential election, and progress from here is highly likely to accelerate. On the other hand, the situation in Lebanon, the Hezbollah issue, and the movements of the Houthis remain uncertain factors, and the risk of sudden news in the opposite direction remains. For energy stocks, short-term selling and long-term wait-and-see, and for defense stocks, short-term selling and long-term holding are realistic investment decisions. In Japan, I would like to pay attention to the trends of trading companies (Mitsui & Co. 8031, Mitsubishi Corp. 8058, Itochu 8001) and INPEX (1605).

(Source: The Street, CNN)

⑫ [Commodities] Crude oil WTI stable at $70.09 — Supply and demand easing continues as Iran situation calms down

As of the close on Tuesday, June 30, WTI crude oil stabilized at $70.09 (-0.93% from the previous day). Brent was at $73.22 (-0.14%). The scenario of easing supply and demand for crude oil continues, driven by the US-Iran "step back" agreement, the normalization of the Strait of Hormuz, and Special Envoy Witkoff's visit to Doha.

The focus is on Canadian oil production trends. Combined with OPEC+ production increases, stable US shale production, and the full-scale resumption of Iranian crude oil (US Treasury permits are valid until August 21), global crude oil supply is moving toward exceeding demand. The International Energy Agency (IEA) forecasts a crude oil supply surplus of 5 million barrels per day by 2027, a structure that will continue to exert downward pressure.

Chevron CFO Eimear Bonner stated on CNBC last week, "If the Middle East situation stabilizes, the effect of falling crude oil prices will be reflected in consumer gasoline prices with a time lag."

★ Investor Perspective: The stabilization of crude oil at $70.09 is an important factor in easing US inflationary pressure. This movement is consistent with the significant decline in 5-year long-term inflation expectations to 3.3% (University of Michigan figures from last Friday), which acts to lower the hurdle for the Fed's interest rate cut decisions. On the other hand, such a sharp decline in crude oil puts significant pressure on the earnings of energy companies. ExxonMobil, Chevron, Halliburton, INPEX (1605), ENEOS (5020), and trading companies like Mitsui & Co. (8031), Mitsubishi Corp. (8058), and Itochu (8001) are in a phase where they are susceptible to short-term selling pressure. In the long term, how these companies advance their transition to new energy (hydrogen, offshore wind, geothermal, nuclear) will be the deciding factor for investment decisions.

(Source: CNN, Trading Economics)

⑬ [US Stocks] US stocks mixed on Tuesday, June 30 — Dow -0.24%, reaction the day after record highs

US stocks on Tuesday, June 30, saw mixed results as a reaction to Monday's record rebound (Dow +307pt to a record high of 52,183, S&P +1.2%, Nasdaq 100 +2.3%). The Dow fell 0.24%, the S&P 500 rose 0.03%, the Nasdaq rose 0.29%, and the Russell 2000 was flat.

Rev Shark Deporre of TheStreet analyzed, "The stocks that led Monday's rise are the same ones that were hit hardest in last week's sell-off. Sustained gains require breadth in participating stocks. The rebound driven by short covering and quarter-end positioning is not a sign of fundamental health."

With the end of the quarter and the first half of the year, institutional investor rebalancing trades became active, and individual large-cap gainers like AMD (+7%, all-time high) and AeroVironment (+30%+) supported the indices.

★ Investor Perspective: Shark's point is important; whether Monday's rebound is due to fundamental health or technical factors (short covering, quarter-end positioning) will become clear in the latter half of this week. In my opinion, a full-scale trend reversal requires seeing the monetization of hyperscaler AI capital expenditures in earnings reports (late July to August). Until then, a wait-and-see stance toward tomorrow's US June employment report and next week's FOMC (7/29-30) is likely to continue. Long-term investors should remain calm, and short-term traders should be cautious.

(Source: TheStreet, Trading Economics)

⑭ [Corporate] Verizon -5.2% after Dow exit — 7%+ dividend remains attractive

Verizon continued to adjust after its exit from the Dow (effective Monday, June 29) on Tuesday, June 30, falling 5.2%. This is in contrast to Alphabet, which ended its first day as a Dow component up 4.96%. According to comments from Schwab, "Since there are not that many funds that track the Dow, Verizon will not be significantly affected by the removal from funds," suggesting that the long-term supply and demand impact will be limited.

What to watch in Verizon's stock valuation is its dividend yield. At over 7%, it remains an attractive level for long-term holders. The company maintains a structure that preserves its retail customer base despite stable earnings from its 5G and Fixed Wireless Access (FWA) businesses and competition from T-Mobile, SpaceX, and others.

Competition in the telecommunications industry is accelerating with restructuring, such as the Comcast split (announced Monday, June 29), Charter Communications-SpaceX partnership talks, and Rocket Lab's $8B acquisition of Iridium. Verizon is also entering a period where it must decide whether to survive alone or pursue some form of strategic partnership.

★ Investor Perspective: Verizon's dividend of over 7% is significantly higher than the 4.38% yield on the US 10-year Treasury note, making it attractive to income-oriented investors. However, the sustainability of the dividend should be monitored; I would like to check the trends in capital adequacy ratio, free cash flow, and dividend payout ratio every quarter. In my opinion, the key is whether Verizon can maintain its own path as the telecommunications industry restructures. If it cannot adapt to environmental changes such as T-Mobile US's advantage, SpaceX's Starlink, and Comcast's split strategy, the risk of long-term market share decline remains. In Japan, comparing Verizon's position with NTT (9432), KDDI (9433), and SoftBank Corp (9434) is also a useful reference.

(Source: Schwab, Trading Economics)

⑮ [Earnings] Concentrix -22% on Q2 earnings miss — Structural changes in AI service outsourcing

On Tuesday, June 30, Concentrix (CNXC, customer experience solutions) plunged 22%. The decline was driven by Q2 earnings missing market expectations and weak guidance for Q3 and the full year 2026.

Concentrix is a company that provides outsourcing services for call centers, customer support, and IT services, and it is facing the wave of operational efficiency through AI utilization. As generative AI replaces traditional customer support tasks, the company's business model is being forced to undergo a structural transformation.

In the same sector, peers such as TaskUs, TTEC Holdings, and Teleperformance (France) face similar challenges, making this one of the sectors at the forefront of AI disruption risk.

★ Investor Perspective: Concentrix's -22% drop is a signal that the divide between sectors benefiting from AI and those threatened by it is becoming clear. Similar movements are likely to occur in other sectors, and in the AI era, it is crucial to distinguish between 'AI beneficiary stocks' and 'AI disruption risk stocks' when making investment decisions. In Japan, major IT service providers such as NTT Data Group (9613), SCSK (9719), ITOCHU Techno-Solutions (4739), and Fujitsu (6702) face similar structural challenges. On the other hand, these companies are positioned to enjoy new growth opportunities if they can pivot to becoming AI solution providers. I view the long-term recovery scenario for Concentrix as dependent on its transition to an AI platform provider.

(Source: TheStreet)

⑯ [Monetary Policy] Fed Governor Warsh, European Forum remarks (Today 7/1) — Will the hawkish stance continue?

Today, Wednesday 7/1, Fed Governor Warsh is scheduled to speak at the European Forum. Coming right after the US Supreme Court confirmed the reappointment of Governor Lisa Cook and reaffirmed the Fed's independence, this is a situation where Governor Warsh's remarks are highly likely to influence market views.

At the 6/17 FOMC, Governor Warsh clearly emphasized 'continued vigilance against inflation risks,' and the dot plot showed 9 out of 18 members expecting a rate hike within the year. Last Friday's significant drop in the University of Michigan's long-term (5-year) inflation expectations to 3.3% (down 0.6 points from the previous month) is a factor that lowers the hurdle for a rate hike decision.

Opinions are divided, with Professor Siegel of the Wharton School at the University of Pennsylvania saying 'a Fed rate hike is difficult this year,' while Bank of America expects 'three Fed rate hikes this year.'

★ Investor Perspective: Governor Warsh is known as someone with a strong 'vigilance against a second wave of inflation,' and his tone differs significantly from that of former dovish Chair Powell. In my interpretation, Warsh is engaging in a psychological battle to 'lower long-term inflation expectations by continuing to suppress market expectations for rate cuts.' Last week's significant drop in the University of Michigan's 5-year inflation expectations to 3.3% can, in a sense, be read as an early success of the Warsh strategy. I want to observe carefully whether he maintains this hawkish stance at the European Forum or shows a willingness to engage in dialogue with the market.

(Source: Schwab)

⑰ [Regulation] US House Committee launches investigation into Merck and AbbVie — China military-linked clinical trials

Reuters reported that a US House committee has launched an investigation into Merck (MRK) and AbbVie (ABBV) regarding their participation in clinical trials in China. Both companies' shares were down less than 1% in pre-market trading. Specifically, the investigation is looking into whether their clinical trials 'involved participation in projects that support Beijing's military capabilities.'

This is part of the technological and regulatory conflict between the US and China, following a series of strengthened US sanctions in advanced fields such as semiconductors, AI, and biotech. The spillover into the pharmaceutical sector suggests that the conflict between the two countries is becoming even more widespread.

Merck and AbbVie are major US pharmaceutical companies, each with many blockbuster drugs (Merck has 'Keytruda,' AbbVie has 'Humira,' 'Rinvoq,' etc.) and global operations. The Chinese market is also an important growth area for both companies.

★ Investor Perspective: The spread of regulation to the pharmaceutical sector is a factor that forces a rethink of global pharmaceutical companies' China strategies. In my view, US regulations against China are likely to continue to expand, and major pharmaceutical companies will need to proceed cautiously with their business operations in the Chinese market. In Japan, major pharmaceutical companies such as Takeda Pharmaceutical (4502), Daiichi Sankyo (4568), Eisai (4523), and Chugai Pharmaceutical (4519) will also need to adjust their China business strategies while monitoring US regulatory trends. For long-term investors, it is important to look for stocks where regulatory risk is not yet fully priced in.

(Source: Schwab, Reuters)

⑱ [Japanese Economy] Today 7/1 BOJ Tankan Q2 — Business sentiment, material for additional rate hike decisions

Today, Wednesday 7/1, the BOJ Tankan Q2 is the most important indicator for measuring the business sentiment of Japanese companies. Following the BOJ's June rate hike (0.75% to 1.00%, the highest level in 31 years), it will serve as a basis for judging additional rate hikes (1.00% to 1.25%).

Points of focus are: (1) Large manufacturing business sentiment DI, (2) Large non-manufacturing DI, (3) Small business sentiment, (4) Capital investment plans, and (5) Price outlooks (selling price DI, purchase price DI).

Given the flow of Japan's May CPI at +1.5% YoY (accelerating from 1.4% the previous month), core CPI at +1.4%, May corporate goods price index at +6.3% YoY, and the surprise May export growth of +17% YoY, it is highly likely that corporate sentiment will show an improving trend.

★ Investor Perspective: If the large manufacturing DI in the BOJ Tankan exceeds market expectations, the structural expectation for additional rate hikes will strengthen further. This will simultaneously act as a tailwind for bank stocks (MUFG 8306, Sumitomo Mitsui FG 8316, Mizuho 8411), trigger a full-scale shift toward a stronger yen, and weigh on export companies (Toyota 7203, Honda 7267, Sony Group 6758, Nintendo 7974). This is the timing to fine-tune yen and stock positions based on the market reaction after the Tankan. While the BOJ's decision will be carried over to the Monetary Policy Meeting on 7/30-31, market expectation formation will begin in earnest today.

(Source: Bank of Japan, FXStreet)

⑲ [Japanese Market] Nikkei Average seeks direction amid mixed US stocks—Focus on AI semiconductor trends

The Tokyo market today, Wednesday, July 1, is expected to seek direction following the mixed performance of US stocks last night, Tuesday, June 30. Following Monday's record rebound and Tuesday's correction, the market structure is seeing increased attention on AI semiconductor-related stocks, driven by AMD's +7% all-time high and the $500B+ memory investment in South Korea by SK Hynix and Samsung.

Specifically, the focus is on the trends of Japanese AI semiconductor players such as Advantest (6857), Tokyo Electron (8035), SUMCO (3436), Shin-Etsu Chemical (4063), Lasertec (6920), Ibiden (4062), Kioxia (285A), and Sony Group (6758, CMOS sensors).

Space-related stocks (ispace 9348, Synspective 5040, Astroscale 186A, QPS Institute 5595) are also expected to see ripple effects from the surge in US space-related stocks (Rocket Lab, Viasat, Satellogic, Planet Labs).

★ Investor Perspective: The Nikkei Average has seen significant short-term volatility since last week's high of 69,902 on Wednesday, June 17, and continues to face a phase where it is difficult to determine a clear direction. In the long term, the themes of Daiwa Securities' year-end forecast of ¥67,000, Nomura Securities' ¥68,000, and the upside scenario of ¥80,000 (end of 2027) remain. This week, the US June employment report tomorrow, Thursday, July 2, is the biggest hurdle, and depending on the results, it will be necessary to fine-tune yen and stock positions. A reasonable stance would be for long-term investors to remain calm, and for short-term traders to hold back until the direction is confirmed after the employment report.

(Source: Trading Economics, The Street)

⑳ [Forex] Dollar-Yen at 162, wavering on Tankan survey—Yen appreciation scenario continues

The dollar-yen is trading at the historic level of 162, and today, Wednesday, July 1, is a day with a series of important events: the BOJ Tankan Q2, US ADP employment, US ISM manufacturing PMI, and remarks by Governor Warsh at the European forum. The US-Japan interest rate differential, with the US 10-year Treasury yield at 4.38% and the US 2-year Treasury yield at 4.23% (a new 2026 high), continues to maintain pressure in the direction of a weaker yen.

Depending on the results of the BOJ Tankan Q2, expectations for additional interest rate hikes by the BOJ may strengthen, potentially triggering a full-scale shift toward yen appreciation. On the other hand, if the strength of the US economy is confirmed (e.g., if the US June employment report exceeds expectations), the dollar-yen is structured to face upward pressure toward the high 162 to 163 range again.

The Japanese government's intervention warnings continue, and the risk of verbal intervention running in parallel, along with consistency with past Japanese government intervention patterns, are extremely important investment decision factors.

★ Investor Perspective: The direction of the dollar-yen is key this week. It is an important week with the BOJ Tankan Q2, US ADP employment, ISM manufacturing PMI, and Governor Warsh's remarks today, Wednesday, July 1, followed by the US June employment report tomorrow, Thursday, July 2. Institutional views are divided, with JPMorgan forecasting 164 yen by the end of 2026, ING forecasting a 155-160 yen range, and Goldman Sachs targeting 150 yen. In the short term, the yen depreciation scenario is dominant, but in the medium term, signs of a shift toward yen appreciation have emerged. This is a time when position size management, hedging strategies, and identifying the timing for buying on dips are important.

(Source: Investing.com, The Street)

Today's Keywords

"Nike Q4 revenue beats at $10.97B but relies on $986M in tariff refunds, AMD +7% to all-time high of $577.61, SK and Samsung invest over $500B in memory in South Korea, AeroVironment +30%, US and Iran resume talks in Doha on Tuesday, US June consumer confidence at 93.1 (below expectations) and JOLTS at 7.618M (above expectations), US ADP employment, ISM manufacturing PMI, BOJ Tankan Q2, and Governor Warsh's remarks today"

*Dollar-yen conversions in this article are calculated at 1 dollar = 160 yen

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